Aussie dollar at one-week low; risk-off mood supports US dollar

Cornelia Mascio
Ottobre 17, 2020

The Reserve Bank of Australia is assessing whether buying longer-dated bonds would help the economy and considering an interest rate cut, Governor Philip Lowe said in a speech in sSydney. Sterling held on to the gains it made the day before on signs of progress in Brexit talks.

In Australia, the central bank is assessing whether buying longer-dated bonds would help the economy and considering an interest-rate cut, Reserve Bank of Australia (RBA) governor Philip Lowe said in a speech. The RBA intervenes to keep the three-year yield at 0.25 per cent but does not control yields further out of the curve. Ten-year bond futures were up 8.5 ticks to their highest since April.

The AUD/USD pair added to its intraday losses and dropped to over one-week lows, around the 0.7100 mark during the early European session.

Markets fear a new wave of lockdowns could stall the global recovery just as hopes for United States stimulus before the Nov 3 election are fading, ditching riskier assets such as equities in favour of safe-haven such as the USA dollar and the yen. Markets fear a new wave of lockdowns could stall the global recovery just as hopes for USA stimulus before the November 3 election are fading.

This comes on the back of a setback in the development of a vaccine for the highly contagious coronavirus disease and concerns about the second wave of infections, which, in turn, benefitted traditional safe-haven assets.

USA drug inspectors also uncovered quality-control problems at an Eli Lilly and Co pharmaceutical plant that is ramping up to manufacture a COVID-19 drug.

The sterling settled at $ 1.30 and 90.23 pence against the euro.

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